Reinsurance is a long-standing tool for stabilizing health insurance markets and reducing premiums. Reinsurance increases affordability for consumers ineligible for the premium tax credit (PTC). However, the effects on PTC recipients are smaller, mixed, and have received little attention. A recent research article in Health Affairs uses evidence from Georgia’s adoption of a reinsurance program in 2022 to argue that reinsurance programs reduce affordability and enrollment among low- to moderate-income people. 

The article raises important questions for state and federal policymakers considering whether to establish or extend reinsurance programs. Its logic about increasing premiums for some consumers seems sound, and it contributes to the empirical evidence. But the research also has important limitations in terms of its scope and methodology. It provides evidence from only less than one-third of counties in one of the 17 states with reinsurance programs; previous empirical research has found little or no impact among the group in question. And the article focuses on a scenario with PTC enhancements, which are scheduled to expire after 2025. Given these limitations, as well as potential costs associated with dismantling—or establishing—a reinsurance program, states may want to wait for additional clarity and evidence before changing any plans for reinsurance programs.

This expert perspective summarizes the Health Affairs article and related considerations around reinsurance.